Following extensive discussion with members, ICAEW has submitted its response to the Making Tax Digital: Draft Value Added Tax (amendment) regulations and notice 2018 published by HMRC on 18 December 2017. The response is available as ICAEW REP 18-2018
We have repeated many of our earlier comments, including our full support for HMRC’s digital transformation initiative, but we believe that MTD should be voluntary. Our members make this known to us at every opportunity. They and we want to help HMRC make MTD a success and welcome the assurance from the Financial Secretary to the Treasury that MTD will not be made mandatory for income tax or corporation tax until the programme is working well, but this principle should naturally also apply to VAT.
We have also made the following key points in this representation:
Sadly you are correct. I have also wasted hours in trying to reconcile PAYE figures for various clients. One of those necessitated numerous phone calls to HMRC. The helper tried their best but they also couldn't understand it suggesting writing in and showing our own reconciliation. This was done almost 2 years ago. No reply was ever received and it is still not resolved. Interestingly the original payment allocations which were also over numerous months as noted by Leslie have now changed although not into the correct periods but some other random ones. Why does this system not work properly? To be fair, most do but when they don't it is a nightmare. Goodness knows what will happen with this farcical Making Tax Difficult plan. Will HMRC pay our fees for sorting out the mess that will occur or can we but hope that it will be such a shambles that it will get dropped? I hope it does!
For many businesses which are already computerised MTD will not involve any additional digitalisation. Smaller businesses not currently computerised will struggle. However some businesses - barristers for instance, have highly sophisticated computerised systems for fees and earnings as run by their chambers, but record their expenses separately. This will not satisfy the requirement for the separate systems to be linked digitally.
I have a client who is having a problem with reconciling his PAYE and NIC position as HMRC seem to think that they owe him almost £20000. According to both me and the client, he is owed £4000 for Employment Allowance for two years. He spoke to HMRC to try to obtain the refund of this £4000 and to find out where the rest of the alleged overpayment has arisen but the person that he spoke to was most unhelpful and, basically, told him to go through the figures and tell them where they had got it wrong. He asked for the £4000 to be refunded as he has not had any work for some time so has not been taking a salary. He also has a personal tax bill that he cannot settle until this money is refunded so that he can reimburse himself for payments made on the company’s behalf.
As he couldn’t work it out, we registered to enable us to access his account. The site is an absolute shambles. When I went to 2015 in the drop down box, I got the figures for 2017. When I clicked on 2017 I got 2013 and when I clicked on 2013 I got 2015. Some of the allocations of payments are ridiculous. For example, a payment on 8 November 2014 has been allocated to month 1 of 2015/16, several months after it was paid, yet the following payment was allocated to months 9, 10 and 11 of 2014/15. A payment on 15 March 2017 is shown as being allocated to month 2 of 2014/15. There is a payment on 12 April 2017 which shows on one part of the agents’ site as allocated to month 1 of 2017/18 but, on another part, to month 1 of 2014/15 yet the payment is not shown at all on the site that our client is looking at.
Another major flaw is that there is absolutely nothing to distinguish between positive and negative amounts. I couldn’t understand where a particular total figure had come from and it was only when I added it up that I realised that the total of the figures was considerably more than the figure shown. I eventually managed to work out that two of the figure were actually minus the amount shown but there was no indication whatsoever that this was the case. Normally a negative would be indicated by the letter R, brackets, being shown in red or something like that.
After eventually making sense of that, I rang the client. It was a very difficult conversation as I mentioned figures to him and he said that he couldn’t see them. I tried to explain where I was looking but the layout of the agents’ pages is different to what the employer sees. We spent a considerable amount of time going round in circles until I suggested that he should send me a “screen dump” of what he was looking at. After further investigation, I discovered that the reason for the problems that we were having was that the figures that he was looking at bore no resemblance to the ones that I was looking at. Also, both of them were completely wrong.
Surely, the taxpayer page and the agents’ page come from the same source so should show the same information !
If we are going to help our clients with the introduction of this ludicrous idea, we need the information to enable us to do so.
This has built up several hundred pounds of unnecessary fees due to sheer incompetence on HMRC’s part.
To be quite blunt, there isn’t a hope in hell of MTD working properly and, yet again, the taxpayer will be the one that has to pay out a fortune in unnecessary fees because HMRC’s software is not “fit for purpose” !
Tax gap. I believe that tax gap exists for several reasons. 1 Individuals who have not registered at all. 2 The intentional under declaration of income. 3 Incompetence 4 lack of knowledge of what is and what is not claimable. Insisting that all registered business's use computerised book keeping will not effect the first two at all and for the other two will give quarterly garbage ( garbage in garbage out)